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A BILL TO BE ENTITLED
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AN ACT
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relating to a franchise tax credit pilot program for taxable |
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entities that contribute to an employee dependent care flexible |
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spending account. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 171, Tax Code, is amended by adding |
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Subchapter P to read as follows: |
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SUBCHAPTER P. TAX CREDIT PILOT PROGRAM FOR EMPLOYER CONTRIBUTIONS |
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TO DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS |
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Sec. 171.801. DEFINITION. In this subchapter, "dependent |
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care flexible spending account" means a pretax benefit account used |
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to pay eligible dependent care services as authorized by the |
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Internal Revenue Code of 1986, as effective on January 1, 2019. |
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Sec. 171.802. ENTITLEMENT TO CREDIT. A taxable entity is |
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entitled to a credit in the amount and under the conditions provided |
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by this subchapter against the tax imposed under this chapter. |
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Sec. 171.803. QUALIFICATION. (a) Subject to Subsection |
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(b), a taxable entity qualifies for a credit under this subchapter |
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if the taxable entity: |
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(1) has an average of not more than 500 employees |
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during the period on which the report is based; and |
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(2) contributes to the dependent care flexible |
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spending account of each employee of the taxable entity who |
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maintains an account and receives from the taxable entity an annual |
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salary or wage of not more than $65,000. |
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(b) A combined group qualifies for a credit under this |
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subchapter in connection with any member of the combined group that |
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satisfies the requirements of Subsection (a). |
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Sec. 171.804. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject |
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to Subsection (b), the amount of the credit for a report in |
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connection with each employee described by Section 171.803(a)(2) is |
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equal to the lesser of: |
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(1) 50 percent of the contributions made by the |
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taxable entity to the employee's dependent care flexible spending |
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account, excluding any portion of a contribution returned to the |
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taxable entity; or |
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(2) $2,500. |
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(b) The total amount of the credit for each report is equal |
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to the lesser of: |
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(1) the total of the credits allowed under Subsection |
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(a) for the reporting period for all employees; or |
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(2) the amount of franchise tax due after applying all |
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other applicable credits. |
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Sec. 171.805. APPLICATION FOR CREDIT. (a) A taxable entity |
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must apply for a credit under this subchapter on or with the tax |
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report for the period for which the credit is claimed. |
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(b) The comptroller shall promulgate a form for the |
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application for the credit. A taxable entity must use the form in |
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applying for the credit. |
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Sec. 171.806. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A |
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taxable entity may claim a credit under this subchapter for a report |
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only in connection with contributions made during the accounting |
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period on which the report is based. |
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Sec. 171.807. DEPOSIT OF CERTAIN REVENUE. Notwithstanding |
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any other law, for each fiscal year, the comptroller must deposit to |
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the credit of the property tax relief fund an amount of revenue |
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received from the tax imposed under this chapter sufficient to |
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offset any decrease in deposits to that fund that results from the |
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implementation of this subchapter. |
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Sec. 171.808. EXPIRATION. This subchapter expires December |
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31, 2021. |
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SECTION 2. (a) Not later than September 1, 2022, the |
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comptroller shall prepare and deliver to the governor, the |
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lieutenant governor, the speaker of the house of representatives, |
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and the presiding officer of each legislative standing committee |
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with primary jurisdiction over taxation a report that evaluates the |
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effect of the pilot program established under Subchapter P, Chapter |
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171, Tax Code, as added by this Act, on employer contributions to |
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employees' dependent care flexible spending accounts for which |
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credits are granted under the pilot program under that subchapter. |
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The report must include a recommendation regarding whether the |
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credit allowed under the pilot program should be reestablished. |
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(b) A taxable entity that claims a credit under Subchapter |
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P, Chapter 171, Tax Code, as added by this Act, shall provide to the |
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comptroller information the comptroller requests to prepare the |
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report described by Subsection (a) of this section. |
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SECTION 3. A taxable entity may claim the credit under |
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Subchapter P, Chapter 171, Tax Code, as added by this Act, only for |
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contributions made on or after September 1, 2019, and before |
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January 1, 2022, and only on a franchise tax report originally due |
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under Chapter 171, Tax Code, on or after January 1, 2020, and before |
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January 1, 2023, notwithstanding the expiration of Subchapter P, |
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Chapter 171, Tax Code, as added by this Act. |
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SECTION 4. This Act takes effect September 1, 2019. |